Adani Enterprises Ltd (AEL) is set to exit its 25-year-old joint venture with Wilmar International in a deal worth around $2 billion. The funds will be used by AEL for its core infrastructure platforms such as energy, utilities, transport and logistics.
Singapore-based Wilmar is seeking strategic investors to replace Adani.
AEL plans to offload its nearly 44% stake in Adani Wilmar Ltd (AWL) in two parts. It will first sell about 13% stake to meet public shareholding norms. The promoters currently hold 88% of the company. Wilmar will acquire the remaining 31% stake, which will increase its holding to nearly 75% from 44%.
The Indian company will sell the 31% stake to Wilmar at a maximum price of Rs 305 per share, according to an exchange notification. AEL will offload the 13% stake in the markets at around the same price, according to people with knowledge of the matter.
Co to be Renamed
Adani Wilmar shares closed Monday at Rs 329.50, down marginally by 0.17%, for a market capitalisation of Rs 42,824 crore. AEL investors cheered – the stock surged 7.65% to Rs 2,593.45
As part of this transition, AEL’s nominee directors, Pranav V Adani and Malay Mahadevia, have resigned from AWL’s board. Additionally, the company will be renamed AWL Ltd, AWL Agri Business Ltd, Fortune Agri Business Ltd or any other name that’s approved by the Ministry of Corporate Affairs.
This comes a little over a month after indictments in the US related to conspiracy of bribery and fraud allegations against Gautam Adani and others.
“This transaction will enable AEL to focus on turbocharging growth in its core infrastructure platforms,” the company stated in an official release.
The share acquisition will be routed through Lence Pte. Ltd, Wilmar International’s wholly owned subsidiary.
“The acquisition of the shares by Lence contemplated by the agreement will result in AWL becoming a subsidiary of Wilmar and will be funded from internal sources as well as bank borrowings,” Wilmar International said in a statement. “Wilmar will explore opportunities to bring in strategic investors to participate in AWL’s growth story.”
AEL is likely to use the funds raised from the sale primarily to invest in green energy, airports and roads, said the people cited. In October, AEL raised $500 million through a QIP.
Adani Wilmar, which was listed in 2022, says it’s India’s leading edible oil and food fast-moving consumer goods (FMCG) company, with 24 factories in 15 cities, 10,000 distributors and 720,000 retail outlets across India. It also exports to over 30 countries.
“The rural market in India presents significant growth opportunities, and AWL is well positioned to capture a substantial market share, by leveraging Wilmar’s global operations and distribution network,” Wilmar said. Its presence in India will not only strengthen its position domestically but also “enhance trade flows and sourcing capabilities” within Wilmar’s global network, the company added.
In August this year, Adani Enterprises announced the demerger of its food and FMCG business to Adani Wilmar, then cancelled this in October, owing to the minimum public shareholding (MPS) requirement.
Source: Economic Times